GOODWILL AND INTANGIBLE ASSETS

Goodwill

Duke Energy

The following table presents goodwill by reportable segment for Duke Energy included on Duke Energy's Consolidated Balance Sheets at December 31, 2018, and 2017.



	Electric Utilities		Gas Utilities		Commercial
(in millions)	and Infrastructure		and Infrastructure		Renewables			Total
Goodwill Balance at December 31, 2017	$	17,379	$	1,924	$	122		$	19,425
Accumulated impairment charges^(a)	—		—		(29		)	(29		)
Goodwill balance at December 31, 2017, adjusted for accumulated impairment charges	$	17,379	$	1,924	$	93		$	19,396

Goodwill Balance at December 31, 2018	$	17,379	$	1,924	$	122		$	19,425
Accumulated impairment charges^(a)	$	—	$	—	$	(122	)	$	(122	)
Goodwill balance at December 31, 2018, adjusted for accumulated impairment charges	$	17,379	$	1,924	$	—		$	19,303


(a)	Duke Energy evaluated the recoverability of goodwill during 2017 and recorded impairment charges of $29 million related to the Energy Management Solutions reporting unit within the Commercial Renewables segment. The fair value of the reporting unit was determined based on the market approach. See "Goodwill Impairment Testing" below for the results of the 2018 goodwill impairment test.

Duke Energy Ohio

Duke Energy Ohio's Goodwill balance of $920 million, allocated $596 million to Electric Utilities and Infrastructure and $324 million to Gas Utilities and Infrastructure, is presented net of accumulated impairment charges of $216 million on the Consolidated Balance Sheets at December 31, 2018, and 2017.

Progress Energy

Progress Energy's Goodwill is included in the Electric Utilities and Infrastructure segment and there are no accumulated impairment charges.

Piedmont

Piedmont's Goodwill is included in the Gas Utilities and Infrastructure segment and there are no accumulated impairment charges.

Goodwill Impairment Testing

Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont are required to perform an annual goodwill impairment test as of the same date each year and, accordingly, perform their annual impairment testing of goodwill as of August 31. Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont update their test between annual tests if events or circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value.

In the third quarter of 2018, based on the results of the annual quantitative goodwill impairment test, management determined that the fair value

of the Commercial Renewables reporting unit was below its respective carrying value, including goodwill. Determination of the Commercial Renewables reporting unit fair value was based on an income approach, which estimates the fair value based on discounted future cash flows. The fair value of the Commercial Renewables reporting unit is impacted by several factors, including forecasted tax credit utilization, the cost of capital, current and forecasted solar and wind volumes, and legislative developments. Certain assumptions used in determining the fair value of the reporting unit in the 2018 impairment test changed from those used in the 2017 annual impairment test including the cost of capital as a result of rising interest rates and the timing of tax credit utilization due to tax reform and IRS clarification on bonus depreciation in August 2018. Based on the quantitative impairment test, the estimated fair value of the Commercial Renewables reporting unit was below its carrying value by an immaterial amount but still more than the goodwill balance assigned to the reporting unit. As such, the entire remaining goodwill balance of approximately $93 million was impaired during the third quarter of 2018.

The fair value of all other reporting units for Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont exceeded their respective carrying values at the date of the annual impairment analysis.

Intangible Assets

The following tables show the carrying amount and accumulated amortization of intangible assets included in Other within Other Noncurrent Assets on the Consolidated Balance Sheets of the Duke Energy Registrants at December 31, 2018, and 2017.



	December 31, 2018
				Duke				Duke		Duke		Duke		Duke
	Duke			Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy			Carolinas		Energy		Progress		Florida		Ohio		Indiana			Piedmont
Emission allowances	$	18		$	—	$	5	$	2	$	3	$	—	$	12		$	—
Renewable energy certificates	168			46		120		120		—		2		—			—
Natural gas, coal and power contracts	24			—		—		—		—		—		24			—
Renewable operating and development projects	84			—		—		—		—		—		—			—
Other	6			—		—		—		—		—		—			3
Total gross carrying amounts	300			46		125		122		3		2		36			3
Accumulated amortization – natural gas, coal and power contracts	(20		)	—		—		—		—		—		(20		)	—
Accumulated amortization – renewable operating and development projects	(29		)	—		—		—		—		—		—			—
Accumulated amortization – other	(5		)	—		—		—		—		—		—			(3		)
Total accumulated amortization	(54		)	—		—		—		—		—		(20		)	(3		)
Total intangible assets, net	$	246		$	46	$	125	$	122	$	3	$	2	$	16		$	—



	December 31, 2017
				Duke				Duke		Duke		Duke		Duke
	Duke			Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy			Carolinas		Energy		Progress		Florida		Ohio		Indiana			Piedmont
Emission allowances	$	19		$	1	$	5	$	2	$	3	$	—	$	13		$	—
Renewable energy certificates	148			38		107		107		—		3		—			—
Natural gas, coal and power contracts	24			—		—		—		—		—		24			—
Renewable operating and development projects	79			—		—		—		—		—		—			—
Other	6			—		—		—		—		—		—			3
Total gross carrying amounts	276			39		112		109		3		3		37			3
Accumulated amortization – natural gas, coal and power contracts	(19		)	—		—		—		—		—		(19		)	—
Accumulated amortization – renewable operating and development projects	(22		)	—		—		—		—		—		—			—
Accumulated amortization – other	(5		)	—		—		—		—		—		—			(3		)
Total accumulated amortization	(46		)	—		—		—		—		—		(19		)	(3		)
Total intangible assets, net	$	230		$	39	$	112	$	109	$	3	$	3	$	18		$	—

During the year ended December 31, 2017, Duke Energy recorded a pretax impairment charge of $69 million on a wholly owned non-contracted wind project. The impairment was recorded within Impairment charges on Duke Energy’s Consolidated Statements of Operations. $58 million of the impairment related to property, plant and equipment and $11 million of the impairment related to a net intangible asset that was recorded in 2007 when the project was acquired. Prior to the impairment, the gross amount of the intangible asset was $18 million and the accumulated amortization was $7 million. The intangible asset was fully impaired. See Note 10 for additional information.

Amortization Expense

Amortization expense amounts for natural gas, coal and power contracts, renewable operating projects and other intangible assets are immaterial for the years ended December 31, 2018, 2017 and 2016, and are expected to be immaterial for the next five years as of December 31, 2018.